A New Path to Prosperity

When Pennsylvania and later Iowa — two key battleground states — turned blue on the maps on election night, the race was over. While other Western swing states eventually turned blue as well, it was clear the presidential election had been decided in the Rust Belt.

Too many people in these Midwestern states are being left behind in the competitive global economy. They have solid work ethics, and many once held high-paying jobs in factories that have since closed. The hope of the last quarter century that their jobs would return has become resignation for many. They feel left behind in the transition to an Information-Age, globally competitive economy.

President-elect Obama today offers them hope, but of a very different kind than President Reagan offered in 1980. Reagan promised to strengthen the economy by providing new incentives to work, save, and invest, setting in place policies that led to 25 years of strong economic growth.

Mr. Obama offers a different kind of hope, based more upon the promise of security assured by a stronger government.

Unless conservatives speak to these disaffected Americans who are being left behind, these important voters will continue to see government security as the preferable option.

America still is a center-right country, one that cherishes freedom and rewards hard work and an enterprising spirit. That was the message of Joe the Plumber that resonated in this campaign.

We need to remind people that if we lose the initiative and self-reliance that are the bedrocks of a free society, we will also lose the hope and promise of what we can be and what America can become. We must find the path to prosperity for people who value the dignity of work but who feel marginalized by limited opportunities. It is naive to think we can close our borders and expect our economy to grow. Government transfers will limit freedom and increase dependency. And an educational system that fails too many children will leave them unprepared for the continuing challenges ahead.

There are disaffected workers in every state, but they are concentrated in these big swing states. We must work carefully to analyze the roots of the economic decline and craft policies that bring them into tomorrow's economy.

And what role does health care play?

Robert Blendon of Harvard recently published a detailed survey of Americans' views toward health care. He finds that more than four out of five Americans say the health care they get is good to excellent. Nearly half believe that, despite its problems, the U.S. has the best health care system in the world.

Importantly, only 18% say that they think the system is in crisis and needs a complete overhaul. About half say it has major problems and needs major reform. But delving deeper, you find that means they think it needs to be changed for other people, not for them personally.

But action will taken by President-elect Obama.

So what are the likely first steps of an Obama administration? Princeton professor and New York Times columnist Paul Krugman gave clear signals in a recent interview:

"There are four pieces to this plan:

community rating, to prevent 'cherry-picking' by private insurers

subsidies to help lower-income people afford insurance

a form of mandatory insurance for children

government-run plans so people can opt out of private insurance. Many people think such a federal health insurance system would eventually merge with Medicare and Medicaid to form a larger national system."

I continue to believe that providing equal access to subsidies for private health insurance would provide a new sense of security to millions of people left out of the current system. They would be newly empowered with choices in a market responding to them and their needs, and people with pre-existing and chronic conditions would have new options. Portable subsidies coupled with new protections and purchasing options would lead to more affordable coverage.

We will work to be part of the conversation to give people an alternative to an expanded role for government programs.

I happened to see a quote by Gen. Douglas MacArthur framed in a restaurant as I was returning from a speech in Minneapolis on Election Day. It seems appropriate:

The Netherlands provides a blueprint for successful, market-oriented health care reform, according to Munkhammar. Today, every Dutch citizen is required to have basic insurance coverage for medical treatment, long-term care, and dental and maternity care. Citizens and noncitizens choose from among 14 private insurers that compete for enrollment. This competition has led to lowering the "health tax" a full percentage point and also has led to lower premiums for insurance, he reports. The average annual premium is nearly US$1,500 lower than initially estimated, and 80% of the population has saved money on health care.

While the U.S. is unlikely to ever try to go down an NHS-style route, policymakers do seem to be inspired by European ways of organizing health care, writes Helen Disney of the Stockholm Network. In the end, though, the likelihood of the European approach taking the ascendancy will ultimately come down to what governments can afford to spend and, for now, the answer seems to be not very much.

Kendall recommends that the next president issue a 'Mayo Challenge' to strive for patient care standards as good and economical as those of the world-renowned Mayo Clinic, a successful example of the integrated health care model. Kendall recommends changing the medical payment system, letting individuals choose their own health plan, and leveraging federal health care spending to encourage savings from integrated care.

While certain elements of Obama's health care proposal could be modified, at its core are principles that would change health care delivery and coverage in the U.S., reports Forbes. The cornerstones of Obama's plan are to expand Medicaid eligibility to include greater numbers of the uninsured; mandate coverage for children; create a national exchange through which the uninsured could purchase a public or private policy; provide subsidies to lower-income individuals and small businesses to help defray the cost of purchasing insurance; and, tax medium- to large-size firms that decline to provide their employees with health insurance. The estimated federal cost of enacting the plan is $1.17 trillion from 2010 to 2019. Forbes says Mr. Obama has not offered plans to finance his reform package or details on what size of businesses would qualify for tax credits and which would be taxed.

The cost of the Medicare prescription drug program fell $6 billion this year – savings driven by the widespread use of low-cost generic drugs, reports USA Today. Generics account for 64% of Medicare prescriptions compared with 61% in the private sector. The prescription drug program for seniors has cost about one-third less — about $50 billion — than originally estimated since it started in January 2006. Medicare prescription drug spending dropped by 12% to $44 billion in the fiscal year ended Sept. 30.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at www.galen.org.

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views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.